Correlation Between Cardinal Health and Ryman Hospitality

Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Ryman Hospitality at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cardinal Health and Ryman Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardinal Health and Ryman Hospitality Properties, you can compare the effects of market volatilities on Cardinal Health and Ryman Hospitality and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cardinal Health with a short position of Ryman Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Ryman Hospitality.

Diversification Opportunities for Cardinal Health and Ryman Hospitality

0.78

Correlation Coefficient

Cardinal Health  Ryman Hospitality

Poor diversification

The 3 months correlation between Cardinal and Ryman is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Ryman Hospitality Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Hospitality and Cardinal Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cardinal Health are associated (or correlated) with Ryman Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryman Hospitality has no effect on the direction of Cardinal Health i.e., Cardinal Health and Ryman Hospitality go up and down completely randomly.

Pair Corralation between Cardinal Health and Ryman Hospitality

Considering the 90-day investment horizon Cardinal Health is expected to under-perform the Ryman Hospitality. In addition to that, Cardinal Health is 1.27 times more volatile than Ryman Hospitality Properties. It trades about -0.11 of its total potential returns per unit of risk. Ryman Hospitality Properties is currently generating about -0.01 per unit of volatility. If you would invest  11,119  in Ryman Hospitality Properties on September 19, 2024 and sell it today you would lose (38.00) from holding Ryman Hospitality Properties or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cardinal Health  vs.  Ryman Hospitality Properties

Cardinal Health

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ryman Hospitality

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ryman Hospitality Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Ryman Hospitality is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cardinal Health and Ryman Hospitality

The main advantage of trading using opposite Cardinal Health and Ryman Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Ryman Hospitality can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ryman Hospitality will offset losses from the drop in Ryman Hospitality's long position.

The idea behind Cardinal Health and Ryman Hospitality Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.